Sterne Agee has been touting Cray Inc. (NASDAQ: CRAY) lately with big potential upside for investors. The analyst team includes Alex Kurtz and Amelia Harris, who are talking up the opportunity ahead after meeting with Cray’s management. Their rating remains Buy, with a $25 price target.

The team noted:

We remain confident in the company’s ability to execute 2013 guidance against the backdrop of Sequestration given exposure to growing Security and Defense HPC budgets. We view Cray as one of the better secular names in our space with upside from share gain opportunities, driven by a significant product refresh this year.

As far as the upside, the $18.19 price against a $25 price target implies upside of about 37%. What investors need to consider is that the analyst team at Sterne Agee has been positive from even lower prices, and the team once had upside at about 50%.

Cray is being called one of the better secular stories in IT hardware, with its new products, market growth and share gains all acting to drive revenue growth for the next several years. Cray is expected to take away market share from both International Business Machines Corp. (NYSE: IBM) and Hewlett-Packard Co. (NYSE: HPQ). The analysts even believe that management is not expecting a significant impact from sequestration at this point

Cray shares actually have ticked up 1.5% to $18.46 so far on Tuesday, against a 52-week range of $10.65 to $23.59. Cray’s market cap remains just under $700 million and the consensus price target is about $24 on the stock.

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